Why is China obsessed with 8% economic growth? Is it truly to maintain social stability or is it mainly political?...

Updated on May 1, 2011

The short answer to that would be that China quite simply has no option but to be obsessed with and ensure 8% growth at a minimum. Why does China need 8% growth you ask? Well, over the past decade or two, the Chinese have been able to grow at an astonishing rate of 10% on average, frequently crossing the 10% mark comfortably on occasions. That meant that the large Chinese population was relatively happy because they had jobs and a good quality of life. The large population of Chinese people who migrated to the cities in search of better opportunities were absorbed into the economy easily because Chinese exports were growing at a fantastic pace. The Chinese communist leadership couldn't have asked for a better scenario. The going was really good.

However, with the economic downturn that started in early 2008, things have gotten quite bad for the Chinese economy. They've suffered just as much as the rest of the world. Having an economy that depended largely on exports quite obviously didn't help. So, now we have lots and lots of Chinese people out there who've lost jobs, haven't been paid for months, or are on the verge of losing their jobs. For the Chinese regime, this obviously isn't good news. The Chinese communists have depended on their fantastic growth rates to keep their people happy and keep their mouths shut. They figured as long as they give the Chinese people economic growth and jobs and better quality of life, the Chinese people wouldn't ask for greater political rights or democracy or come out on the streets to protest against their government's policies. They were right and the system just worked fine, except for a brief period during the Tiananmen Square massacre.

However, if the Chinese growth rate plummets below 8% to say around 5-6% (as some analysts say they would), then the Chinese communists would have a serious problem on their hands. Its entirely possible that the rising number of unemployed Chinese might take to the streets and create social unrest (something that gives the jitters to the authoritarian Chinese regime). They surely wouldn't want another Tiananmen Square to happen. So, the main reason why the Chinese regime is scampering to stimulate their economy and maintain 8% growth is to avoid widespread social unrest and possible political repercussions.

Comments 6 comments

Can you elaborate on what you mean by "quality." Quality growth?? If you meant that, do tell me what you mean by that? I'd be interested in knowing.

fishskinfreak2008 7 years ago from Fremont CA

I mean the quality of Chinese products. They are still mainly a manufacturing-based economy. The services industry is still primitive. Most people work in factories or on farms. Also, China has a horrific safety record. Do you know about the Sanlu melamine scandal?

Shil1978 7 years ago Author

Agree FSF, the quality of Chinese products is awful. Also, the manufacturing bias isn't going to help them in the long run. Yes, I am aware of the melamine scandal - that was sad. Just speaks of the poor quality control within China - you had the case of the tainted toys too before the melamine scandal!!

dutchman1951 7 years ago from Tennessee, USA

To me 8% seems a calculated number, just enough to prevent a population that out numbers the Gov. and the Army by about 100 to 1, from rioting, and just enough that the people do not become more prosperus than the goverment, and thus gain control.

For my thought, It seems another short comming of Communism, proving to me it can not stand up to time. But yet it seems to withstand it. Amazing.

The Other thing I see from this, is China is riding the same capitol roller-coaster as everyone else.

For awile they are in the money, then out of it, up and down; yet trying hard to keep the 8% margin they so want.

This seems a source of frustration, which they, China's Goverment at times, seem to blame others for.

But- some how they Lend Countries monies and participate in a world economy. Invest, and then hold back from the People of China, and their system trudges on!

This is a very Interesting question, when you consider all that is inside this. It is facinating actually

As for Quality, I think they took a lesson from the US. You Trim your quality control only so far, and let some problems be, do not fix them. That way goods wear out or break and need replacement.

The quality control costs are thus controled, making more profit possible by lowering hiden manufacturing costs.

By designing in a problem, your customer needs to return for service, and thus, more money is made.

To me Chineese goods are as good or as bad on the high end as America's or Germany's.

Now on the low end stuff, No, it is very poor.

But...profit margin is lower on cheeper goods, so...again, another US Lesson learned well!